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About a year after the Polk County Board of Supervisors shelved plans to work with a developer to build a hotel connected to the Iowa Events Center, the board will revisit the idea of expanding Hy-Vee Hall. The hope is that it will spur more convention business and encourage a developer to build a hotel without public incentives.

The county is facing increasing pressure to make a decision on the future of its convention space as the Polk County Convention Complex (the Plex) racks up millions in needed repairs and renovations, and other cities have opened grand convention centers that are taking business away from Des Moines.

RDG Planning & Design is expected to come out with a study of possible plans and costs in the next couple weeks, which could go before the supervisors before the end of the year. The goal is to combine Hy-Vee Hall’s exhibition space with about 60,000 square feet of new meeting rooms and a ballroom (the current size of the Plex’s space). Discussion is already taking place about using the Plex to alleviate overcrowding at the Polk County Courthouse.

The debate about expanding Hy-Vee Hall is becoming more of an afterthought as Des Moines has seen increased competition regionally.

“We are clearly what I call at a competitive disadvantage,” said Supervisor E.J. Giovannetti. “It’s kind of like if you’re going to stay in the convention business, then you ought to do something about it, and I think time and time again staying in the convention business has proved to be a good economic move.”

“I think civic leaders all over realize the convention business is a good economic driver for a community,” said Greg Edwards, president and CEO of the Greater Des Moines Convention and Visitors Bureau (CVB). “It brings in new fresh dollars when these people come to town and they spend money in a lot of different ways.” In addition to hotels, restaurants, nightclubs and retailers benefit, he said.

The bigger question is whether to provide incentives for a hotel, which could make Des Moines more competitive in attracting larger national events.

At a supervisors meeting in October, Edwards said Des Moines missed out on hosting 11 groups in the past six months specifically because the Events Center did not have an attached hotel. To determine the potential impact of a convention, his group takes the figure from Business Travel News magazine that says an outside traveler in Des Moines spends on average $252 a day, then multiplies it by the number of hotel room nights booked; in other words, one event can bring hundreds of thousands of dollars to the city.

Edwards said local governments tend to fund convention center projects because “historically a convention center itself does not make a lot of money, but what it does is drive economic vitality to the rest of the community.”

Outside competitors

Plans for the Iowa Events Center originally included breakout rooms and a ballroom, but those amenities were scrapped to keep the cost of the project at around $200 million. The goal was to make Hy-Vee Hall an exhibition center, while groups could use the Plex for meetings and larger events.

But as Hy-Vee Hall has evolved to host larger banquets and meetings, “we’ve definitely had to get creative,” said Matt Homan, general manager of the Events Center. The American Quilters Society Expo, for example, had to hold some of its meetings in locker rooms.

Meanwhile, several Iowa cities and larger Midwest cities have added or renovated existing convention space and even helped fund a connected hotel. An Economics Research Associations study completed for the supervisors in April showed that since 1999, Dubuque has added a new 86,000-square-foot Grand River Center, Coralville has a new 280-room Marriott with an attached 60,000-square-foot meeting facility and Council Bluffs has a 64,000-square-foot convention center. Many statewide conventions have started rotating their meetings among several cities, rather than remaining based in Des Moines.

Even in Des Moines, competition for larger local events has increased as Prairie Meadows Racetrack and Casino has added a new banquet space of 14,300 square feet and is waiting for a study to determine the need for an attached hotel. Jordan Creek Town Center also has discussed plans to build a convention center.

“We always knew we’d be facing this issue,” said Supervisor Angela Connolly, “and it’s now more apparent than ever to look around and see all the other facilities that have been built and the conferences we’ve been losing.”

The expansion of Hy-Vee Hall would give Des Moines more than 150,000 square feet of space, not including Veterans Memorial Auditorium and Wells Fargo Arena, making it the largest complex in the state. Though state events may remain on a rotation schedule, Homan said the goal would be to attract more regional and national conventions that have gone to Minneapolis, St. Louis, Kansas City and Omaha.

Delay in decision

Last fall, the supervisors were prepared to begin negotiations with Mortensen Development Co. to build a 425-room hotel north of Veterans Auditorium, but then decided to delay the project to get “our own ducks in a row and make sure the need was still there on the convention side,” Connolly said.

The commissioned ERA report proved that the expansion was important. It showed that over 10 years, state conventions at the Plex have dropped to about 25 from 45 and estimated that an expanded Hy-Vee Hall would boost the total conventions back to its 1997 levels in 10 years. This would increase convention-related visitor spending to $38.8 million from $21.1 million.

Global Spectrum, which runs the Events Center, has gone from a budget deficit to making $350,000 in the most recent fiscal year, but Homan said it will take an expansion to keep increasing revenues. The expansion would also save the company $500,000 in operational efficiencies by not having to have a separate staff at the Plex.

“Initially I was really skeptical about (expanding Hy-Vee Hall) because we have such a huge investment in the Iowa Events Center now and it was a little bit frustrating that already folks were saying we’re going to need to expand Hy-Vee Hall,” said Supervisor Tom Hockensmith. “But I’ve got to tell you that the job Global Spectrum has done operating our facilities has been excellent in my opinion and I put a lot of faith and stock in them and as the Board of Supervisors, we need to expand in order to protect our investment.”

Funding needs

Paying for the expansion would likely come from refinancing the county’s debt on the Events Center, extending payments out a few more years. The board is adamant that it does not want to raise property taxes to fund the project.

The greater question is whether to offer public incentives to build a hotel. The ERA report noted that 13 Midwest convention hotels built since 2001 had public financial support and projects in Omaha and Overland Park have been entirely funded by those cities.

Edwards said convention hotels are often too expensive for a developer to undertake without some financial support, but given the economic climate, he said, “I don’t think we’re in any kind of condition to make an incentive offer for a hotel.”

Giovannetti and Hockensmith are against using any kind of incentive for a hotel, and Connolly is taking a wait-and-see approach.

“I don’t want to build a hotel using public credit and have somebody else manage it and at the end of 20 years, we get back a dilapidated hotel,” Giovannetti said. “I don’t want to be in the hotel business.

“I think our job is to protect the investment now called the Iowa Events Center and if we do it right, I think there will be enough private incentive to proceed with a hotel.”

Plus, a new hotel may face a tough battle to become profitable as many hotels have opened in West Des Moines, and downtown hotels including the Des Moines Marriott Downtown and Hotel Fort Des Moines have completed or will undergo renovations. The ERA report predicted that a 400-plus hotel room at the Events Center at 50 percent occupancy would reduce the current competitive set occupancy rate to 63 percent from 68.5 percent now. The report also said other cities have had trouble with the performance of their convention hotels, partially due to costly premiums to build and operate mid- to high-level hotel brands.

Just getting the Hy-Vee Hall expansion would be a much needed boost, said Edwards and Homan. “I’m encouraged by the direction the board is taking and their desire to look at what appears to be an expansion of Hy-Vee Hall,” Homan said.